The Gross Profit Margin is an important ratio used in business to understand a company’s total revenues and short-term financial health. It measures the difference between a firm’s total revenue and its costs of goods sold and is expressed as a percentage. By looking at the Gross Profit Margin, managers can get an idea of how much profit a company is making from the sale of products or services. High Gross Profit Margin ratios are indicative of successful operations, while low ratios may signal the need for corrective actions by management.